SF000 Notes 1.2.docx - Financial Management SF003 Notes...

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Financial Management SF003 Notes Allied had its ups and downs from 2008 through 2012. In 2010, poor weather in California’s fruit- producing regions resulted in below-average crops, which caused 2010 sales to fall below the 2009 level. Then a bumper crop in 2011 pushed sales up by 15%, an unusually high growth rate for a mature food processor. As shown in the chapter’s Excel model, the compound annual growth rate over the 4-year period was 9.88%.5 Due to planned new products, increased production, distribution capacity, a new
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advertising campaign, and other factors, management expects the growth rate to increase slightly, to 10%, in 2013. Therefore, sales should rise from $3,000 million to $3,300 million.
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The reason for adopting the aggressive policy is to take advantage of the fact that the yield curve is generally upward-sloping; hence, short-term rates are generally lower than long-term rates. However, a
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